Time to innovate and build our Silicon Beach

Last year Australia emerged as a world leader in the adoption of smartphones, second only to Singapore. We use our mobile devices to shop, navigate, email, post status updates and even to play. But we find ourselves behind when it comes to building services and apps for those devices. Knowing how to play Fruit Ninja on a smartphone isn’t the same as knowing how to design a games app. This has left us facing an important question: can we become producers of innovation or will we simply remain great consumers of it?

On Friday, I spoke at the Prime Minister’s Digital Economy Forum about the need to focus on internet-driven innovation. Australia has the right elements to create a “Silicon Beach" just like Americans created a second Silicon Valley, called Silicon Alley, in New York, or the Brits’ Tech City in London.

We have many successful tech start-ups. Take Shoes of Prey. This online store allows customers to design their own shoes, have them custom made in China, and then delivered anywhere in the world. If shoes are ripe for internet innovation, what business isn’t?

Financial regulations that make it easier for new businesses to raise capital would help start-ups. As would more Australians coming through university with the right skills. We need more young people with future-proof skills in science, technology, engineering and maths to allow them to innovate in the digital world. Unfortunately, Australia is behind in this area. Our Chief Scientist recently found that our graduation rates in these areas are low by international standards.

As a way to help fill the gap, Google recently partnered with seven universities across the country to help fund computer science training for high schools teachers. Led by the universities, Computer Science for High Schools run workshops for teachers, so they can pick up classroom materials and curriculum ideas, and learn from university professors and real world software engineers, including from Google. We see teachers go back to their schools feeling excited and empowered to teach. But more can be done here.

Silicon Beach, or a vibrant local technology sector, is just the tip of this. In the US, Silicon Valley creates pools of capabilities, ideas and new ways of thinking other business sectors draw from. The bigger opportunity is transforming our entire economy so that every business is a digital business. McKinsey found 75% of the economic benefits of the internet are gained by ordinary companies improving how they do business, not by those with new digital models.

Next to high-speed internet access, two factors will increase digital economy growth.

First, we need to ensure that our laws support innovation, investment and adoption of digital technology. In the area of copyright, there’s growing evidence that the current regime has become outdated. It’s still technically illegal for Australians to shift the DVDs they own into a format they can watch on their iPads. We know more flexible laws that acknowledge digital innovation will benefit us all; one piece of research suggests it would add up to $600 million each year in productivity.

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Second, the government can use its many touch points with businesses and citizens to show what broad gains can be made from internet innovation. Where government leads, households and business, particularly small businesses, will follow. Cloud computing alone should provide a major boost to productivity. KPMG found that if government and business embrace global cloud computing services it will over time increase GDP by $3.32 billion each year.

Government can lift accessibility to public services through online and via mobile. Australia is a world leader in online banking, with over half the adult population using it to transact online, saving immense amounts of time that would otherwise be wasted waiting in lines at the bank. Transacting with government should be the same. A good example is Fix my Street from the UK - a simple website to help people report problems, such as potholes, which has generated over 225,000 reports to date.

We should set out to build the Silicon Beach and use the capabilities and thinking it creates to accelerate the absorption of digital throughout the economy. If we get this right, digital will be a critical source of economic growth for many years to come. Every prospering business will have made the decision to face into the change the internet brings and start the transition today. There’s an opportunity on the table. Let’s seize it.